BUSINESS SPECTATOR COMMENT

Could have expressed it better, but at least I got it out of my system:

BUSINESS SPECTATOR  Wednesday 31 July 2013

 Alan Kohler “The Myth of Pay for Performance

Bryan Kavanagh commented:

Yes, ludicrous salaries and we fawn on these moguls. It’s called rent-seeking – or stealing what’s not yours, Alan. People should Google the term if they’re not au fait with it. It’s why the world financial system has collapsed, and banks are expert rent-seekers too. They offer excessive credit, thereby inflating real estate bubbles and tying customers to bubble-inflated mortgages for 30 years. Oh yes, people may change their bank, but the bubble-inflated mortgage, the grip of death, remains.

Oh, and when the bubble finally bursts and bank profits are no longer there, or they risk going under for their risk management failure–as in the US and Europe–they then seek AND RECEIVE bailouts because they are “too big to fail”! Please get me into such a rent-seeking business in finance or real estate where win/win is the only possible outcome! Nice!

World economies will self-correct once we develop the intestinal fortitude to stop looking the other way on rent-seeking.

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2 thoughts on “BUSINESS SPECTATOR COMMENT”

  1. I have to say something here, the banks “offer” excessive credit but did they “force” the borrower to take anything? No, its the greed that took, sorry no 1 put a gun to any persons head, they are plain stupid and greedy for buying something that returns 3% in rentals because they are “expected” capital retuns. The borrower should default in a correction and the bank and its shareholders should take their”loss” or close down if they are “insolvent”, lets not talk about banks speculating with the deposits shall we?

  2. The solution to the bank problem is either:

    a) public banking only

    OR

    b) break them up (separation of retail and investment arms) & implement the Chicago Plan devised in the 1920s so the government asserts control over the credit/money supply (as it really should) & can actually control the prevailing rate of interest. This is a 100% reserve banking model.

    IMO nothing else will work, and is all smoke and mirrors as you say. The banks need to be chopped down to size + made to work for the economy again via productive use of credit, instead of the parasitical casino games they play today.

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